Robotics, transparency and virtual reality: The critical role of digital transformation in mining

While the impact of technological transformation and digital disruption has been apparent in IT-intensive sectors for some time, these trends are only recently beginning to influence the mining sector.

In what is arguably the most asset-intensive industry, IT is connecting the physical with the virtual — through a raft of technologies, sensors and solutions — enabling greater transparency across mining operations. This transformation is not only about being able to see what is happening across a given mine, but rather about the ability to control the entire mining environment and, eventually, to respond predictively to various operational factors. The future of mining is to create the capability to manage the mine as a system – through an integrated web of technologies like virtualization, sensors, robotics, and the connectivity of IoT, which will allow more complete command of the whole system.

The mining sector is facing a period of enormous challenges. Prevailing problems that have been unresolved are now becoming critical. The fall in commodity prices continues to impact the cost, asset, and debt settings mining companies need. Globally productivity of mining companies has been declining since before the commodity price boom, despite vast production and supply-chain investments. The physical aspect of many mining operations is becoming increasingly difficult. Mining companies are under more pressure than ever to get more material from the ground, of the highest possible grade at the lowest possible cost.

It is therefore not surprising that IDC Energy Insight’s recent survey of 190 miners globally indicates that saving costs is the industry’s top priority. There is no question that mining companies are looking for new ways of doing things, changing the cost and efficiency settings of their operations with profit maximization as a central goal. Within this environment of change, technology’s role as an enabler is becoming a critical for core mining operations that must consistently meet financial and production performance metrics.

IDC Energy Insights research shows that mining companies are looking to technology for drastic operational changes. After improving safety and automation of assets, mine operations management and control is the top strategic objective for 2015. Survey responses show that 69 per cent of mining companies globally are looking at remote operation and monitoring centers, 56 per cent at new mining methods, 29 per cent at robotics, and 27 per cent at unmanned drones. An overwhelming 83 per cent of mining companies say that their technology budgets will increase or stay the same in 2015. The potential for data intelligence, data integration, and technologies like robotics to change the physical nature of mining is recognized by leading mining companies, which are taking steps to realize that potential.

To demonstrate what digital transformation means to mining companies, it is helpful to break the concept down into its parts. IDC considers digital transformation to be made up of five parts: experience transformation, worksource transformation, operating model transformation, information transformation, and leadership transformation. Although digital transformation is not solely about technology, it is enabled at each stage by the technological pillars of IDC’s 3rd Platform — cloud, mobility, big data/analytics and social. These technologies, in conjunction with innovation accelerators like robotics, IoT, and cognitive computing, are fundamentally shifting what it means to operate a mine, as mining companies make the interconnection between the virtual and the physical. Competitive differentiation in the mining industry will increasingly refer to the use of digital technology to change the physical management of mining operations — by changing work practices, types of employee roles, and core mining processes — which will result in a step change improvement in productivity.

Of the five elements of digital transformation mentioned above, three are most important to the way mining companies are now changing. The first is operating model transformation — the connection of people and things to create efficient and effective operations. This is a critical focus of investment across the mining sector now. There are two key areas where operating model transformation will impact mining operations, asset management — particularly employing more predictive maintenance approaches to minimize equipment outages and its impact on production performance, and dynamic planning and scheduling. The second is information transformation — the process of enabling utilization of data across operations to create greater value and ultimately to treat data as an asset. Third is worksource transformation, which isnot only about having the right skills in place to support the transformation, but also engaging and connecting with external stakeholders.

Many mining companies are at the beginning of recognizing the importance of innovation and collaboration across senior leadership, IT and operational technology to find more effective ways of utilizing knowledge across the organization. When looking at mining companies that have been most successful with their transformation initiatives to date, the stand-out characteristic is the nature of their leaders’ vision. Leadership transformation — where senior leaders have a sophisticated understanding of technology that informs their vision for transformation — needs to play a more significant role globally, as it is still developing across the mining sector in most countries.

Below are characteristics commonly displayed by mining companies that have successfully moved to more advanced stages of digital transformation, followed by recommendations from IDC relating to each example:

• A willingness to publically experiment with new technology. Work across your organization to create research insights with internal and external stakeholders. Look to other industries for examples of successful approaches to process innovation and technology initiatives.

• A willingness to change business models. Data-led insights and automation will only deliver value if there is a culture of change. Be willing to change the established work practices and try new approaches to old problems.

• A willingness to make bold bets when the time is right. Mining companies already have significant legacy data investments in place. The investments required to enhance visibility and control are often daunting and have an associated level of risk. A willingness to take on measured risk will be required to achieve a step change in productivity. Start with a short sharp example to demonstrate value, and, reaffirm value to stakeholders at each stage as you work up to larger investments. Remember the critical importance of internal marketing to create support across all stakeholder groups.